The only thing worse than bad credit is no credit. If you always pay cash, you probably don't have any credit record. As a result, a mortgage lender will find it extremely difficult to give you a loan. Some people are wizards with cash. They don't own and don't want credit cards or loans. They save until they have enough money to buy whatever they need outright. The problem, here, is that if you're one of these people, you have the next worst thing to terrible credit—you have no credit at all. It’s next to impossible to get a home mortgage with no credit. The solution to the problem is to begin establishing credit long before you plan to buy.

The best course of action is to begin establishing your credit at least two years before you plan to buy and obtain a mortgage. You can deposit money in a bank and imme­diately get a debit card.

Open a checking account. Within a few months of using a checking account, many banks will offer you a credit card. Get it. Once you have one, you will be offered many more from other companies. Get three cards, no more, no less; use the cards and pay them off regularly. (Mortgage lenders usually have a three-card rule. If you have three credit cards, it indicates you have good credit. If you have more than three, it suggests you are abusing your good credit. No, I don't understand it either!)

Next apply for a bank loan. You should be able to use your credit cards to demonstrate enough credit to get it. Then pay it back. Voila, you have a credit history!

If you don't have two years to play around, here are some shortcuts:

- If you pay water, electric, gas, garbage, or cable bills, chances are you have a check record. (Cash may mean you just don't use credit, not that you don't bank.) Produce your canceled checks along with statements to show that you pay on time. Even if you pay with actual cash, get a letter from the utility company testi­fying to your prompt payment.

- If you're renting, produce cashed checks or even better, get a letter from your landlord stating that you always pay your rent on time.

- Get statements from any other person or company to whom to pay regularly and on time.

You can then present all these to a Hawaii mortgage lender. No, the lender is not going to be as pleased as if you had a full credit history showing credits cards and loans and so forth. However, you have demonstrated the ability to repay debt on time, and depending on other factors (the amount of the down payment, the size of the mortgage, the credit report which shows no bad debt), you could get the real estate financing you need.